EU Farm Economics 2012

EU farm
economics
2012
based on FADN data
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EUROPEAN COMMISSION
DIRECTORATE-GENERAL FOR AGRICULTURE AND RURAL DEVELOPMENT
Directorate L. Economic analysis, perspectives and evaluations
L.3. Microeconomic analysis of EU agricultural holdings
Brussels, May 2013
EU FARM ECONOMICS OVERVIEW

FADN 2009
EXECUTIVE SUMMARY
This report provides an overview of key economic developments in the European agricultural
sector based on the latest data available in the Farm Accountancy Data Network (FADN),
which are from 2009. The main finding is that declines in average farm income over the past
two years (2008 and 2009) wiped out virtually all of the gains achieved between 2004 and
2007 in both EU-15 and EU-10. Moreover, higher macroeconomic volatility has reversed the
incipient convergence process between old and new Member States to the point that no
tangible convergence in nominal farm income was observed over the period 2004-2009.
Finally, without the slightly higher amount of public support, as measured by the sum of EU
and national subsidies, the above-mentioned contraction in farm income would have been
even more pronounced.
Income developments
EU-27 average farm income declined sharply in 2009, due mainly to a sizeable drop in
agricultural output prices. Based on the FADN data, average farm net value added per
annual work unit (FNVA/AWU) contracted by around 17 %, from 16 700 in 2008 to 13 900
in 2009. This decline was entirely driven by the fall in FNVA, as AWU increased only
marginally, and was primarily driven by a substantial drop in agricultural output prices (in
particular in the crop, milk and meat sectors), reflecting both supply and demand
developments in a difficult global economic environment. Looking at an alternative measure
of farm income, remuneration per family work unit (i.e. income available after remuneration
of all the external production factors labour, land and capital and adjusted for the
opportunity cost of capital), stood at around 7 350 in 2009, down from 12 250 in the
previous year.
This decline masks substantial differences across Member States/regions and types of
farming. Based on FNVA/AWU, farms in Denmark, the Netherlands, the UK and Belgium
enjoyed, on average, the highest income in 2009, while those in Slovakia, Romania and
Bulgaria were at the opposite side of the spectrum. Lombardy (Italy) was the region with the
highest average income per farm within the EU. Regarding the income differences by type of
farming, granivore, wine and horticulture holdings registered, on average, the highest
FNVA/AWU. On the other hand, other permanent crops and mixed farm incomes remained
well below the average. Income declined across all types of farming in 2009, with the notable
exception of granivore farms, whose FNVA/AWU increased by around 20 % compared to
2008 as feed prices dropped in roughly equal proportions. Finally, at individual farm level,
the income situation remains highly varied, even when differences in farm structure are taken
into account.
Looking at the distribution of FNVA/AWU at farm level, the EU-10 and EU-2 average
income per worker remained significantly below the EU-15 level. More than 95 % of
farms in both EU-10 and EU-2 had an income which was below the average FNVA per AWU
observed in EU-15. The EU-10 average income per worker stood at around 5 700, yet more
than 50 % of holdings had an income per worker of less than 2 700 (median income).
In EU-2, half of the farms had an FNVA per AWU of less than 2 100.
Role of direct payments
Direct payments helped to smooth the variability in EU farms income. In EU-27, the
average share of direct payments in total farm revenue rose from 12.1 % in 2008 to 13.5 % in
2009 as total farm receipts dropped considerably, while the level of public support increased
slightly. This share varies considerably across both Member States, with the Irish farms being
proportionately most dependent on subsidies (which represent nearly 25 % of total farm
revenues). The share of direct payments in revenue also differs substantially across types of
farming, with the highest shares observed in grazing livestock and field crops farms (above
20 %). On the other hand, subsidies account for only a very limited part of total revenue in
wine and horticulture holdings (less than 2.5 %).
Farm structure
Structure of European farms varies markedly in several ways:
Financial configuration. The average farm size in terms of asset value, based on the
2009 data, was highest in Denmark and the Netherlands ( 2 400 000 and 1 950 000
respectively), reflecting very high land prices and the importance of sectors which
typically necessitate considerable investments (such as milk, granivore and horticulture).
By contrast, farms in Bulgaria and Romania displayed the lowest values of total assets
(below 50 000) as they tend to be smaller and oriented towards less capital-intensive
types of farming. In addition, the general price level in EU-2 remains well below the EU27 average.
Labour input. The average number of workers employed per farm stood at 1.6 AWU at
EU-27 level in 2009. However, it varied significantly across Member States, ranging
from 15.5 AWU in Slovakia to 1.1 AWU in Ireland. The average number of workers per
farm in horticulture (the sector with the highest labour input) was approximately 2.5
times larger than in permanent crops other than wine holdings (the sector with the lowest
labour input). Family labour accounted for 77 % of the total labour force in EU-27 and
thus represented the most prevalent form of labour in all but five Member States
(Slovakia, the Czech Republic, Hungary, Bulgaria and Estonia). The average hourly wage
of farm workers stood at 6.34 in EU-27 during 2009, up 6.3 % from a year earlier. This
nominal wage increase more than compensated for the general increase in price level
(EU-27 HICP inflation stood at 1.0 % in 2009).
Land use. The average EU farm size was 32 ha in 2009, little changed from a year
earlier. However, it displayed considerable variability across Member States, ranging
from 575 ha per farm in Slovakia to 4 ha per farm in Malta. Rented land accounted for
53 % of the total agricultural area at EU-27 level in 2009. Land rents were particularly
high (above 700 per ha) in the Netherlands and Canarias (Spain), while they remained
below 30 per ha in the Baltic countries. They also differed markedly across types of
farming: the level of rent per hectare in horticulture and the wine sector was 8 to 9 times
higher than the price paid by grazing livestock farms. At EU-27 level, however, land
rents have changed little since 2007 at 143 per ha.
The Farm Accountancy Data Network (FADN) is a European system of sample surveys
that are run each year and collect structural and accountancy data relating to the farms; their
aim is to monitor the income and business activities of agricultural holdings and to evaluate
the impacts of the Common Agricultural Policy (CAP).
The scope of the FADN survey covers only farms whose size exceeds a minimum threshold
so as to cover the most relevant part of the agricultural activity of each EU Member State
(MS), i.e. at least 90 % of the total Standard Gross Margin1 (SGM) and 90 % of Utilised
Agricultural Area covered in the Farm Structure Survey (FSS, EUROSTAT). For 2009, the
sample consists of approximately 80 000 holdings in EU-27, which represent nearly
5.0 million farms (36 %) out of a total of 13.7 million farms included in the FSS.
The rules applied seek to provide representative data for three criteria: region, economic size
and type of farming. The FADN is the only harmonised source of micro-economic data,
which means that the accounting principles are the same in all EU Member States.
The most recent FADN data available for this report are for the 2009 accounting year due to
time lags stemming from complex data collection, control and processing.
For further information see: http://ec.europa.eu/agriculture/rica/index.cfm.
The Standard Gross Margin (SGM) is the difference between the standardised monetary value of gross
production and the standardised monetary value of certain special costs. This difference is calculated for the
various crop and animal characteristics (per hectare or per animal) at the level of the survey district for each
Member State and given in euro. By multiplying the areas or the number of animals by the corresponding
SGM and then adding these totals together, the total SGM of the holding is obtained. By adding the total
SGM of all holdings of a Member State, the total Member State SGM is obtained. The concept of SGM is
used to calculate the economic size and the type of farming in the FADN and in the Farm Structure Survey
(FSS) organised by EUROSTAT.
CONTENTS
1.
ECONOMIC SITUATION OF FARMS..................................................................... 5

1.1.
1.2.
1.3.
1.4.
2.
Farm income ...................................................................................................... 5

Distribution of income .................................................................................... 13
Income components......................................................................................... 18
Return on assets ............................................................................................... 20
IMPORTANCE OF DIRECT PAYMENTS FOR FARM INCOME ....................... 22

2.1. Share of direct payments in total revenue ....................................................... 22
2.2. Share of direct payments in FNVA ................................................................. 23
3.
FARM STRUCTURE ............................................................................................... 26

3.1. Financial structure ........................................................................................... 26
3.1.1. Total asset value ................................................................................ 26
3.1.2. Total liabilities................................................................................... 28
3.1.3. Development of farm net worth ........................................................ 29
3.1.4. Solvency ............................................................................................ 30
3.1.5. Current and fixed assets .................................................................... 32
3.2. Labour ............................................................................................................. 34
3.2.1. Labour force ...................................................................................... 35
3.2.2. Remuneration of farm workers.......................................................... 37
3.3. Land ................................................................................................................. 39
3.3.1. Farm size ........................................................................................... 39
3.3.2. Importance of rented land ................................................................. 40
3.3.3. Level of land rents ............................................................................. 41
1.
ECONOMIC SITUATION OF FARMS
This chapter reviews the economic situation of farms across EU Member States, focusing
predominantly on the level, development and distribution of farm income. It also discusses
the various farm income components and the return farmers receive on their investment.
1.1.
Farm income
For the purpose of this report, the income of agricultural holdings is measured by means of
the farm net value added and the remuneration of family labour.
Farm net value added (FNVA) is equal to gross farm income minus costs of depreciation. It
is used to remunerate the fixed factors of production (work, land and capital), whether they
are external or family factors. As a result, agricultural holdings can be compared regardless
of the family/non-family nature of the factors of production employed.
FNVA = output + Pillar I and Pillar II payments + VAT balance -intermediate consumption farm taxes (income taxes are not included) - depreciation.
The value is given per annual work unit (AWU) in order to take into account the differences
in the scale of farms and to obtain a better measure of the productivity of the agricultural
workforce.
Remuneration of family labour: In the agricultural sector the bulk of the work force does not
receive a salary but has to be remunerated from the farms income. As the FNVA is required
to finance not only family labour but all production factors, another income estimator the
remuneration of family labour is estimated as follows:
Remuneration of family labour = FNVA + balance of subsidies and taxes - wages paid - paid
rent - estimate of the costs for own land - estimate of the costs for own capital.
The value is given by family labour unit (FWU). Only farms with unpaid labour (which in
most cases means family members) are included in the calculation.
Results by Member State
The FNVA continued to show significant variability across EU Member States in 2009: it
ranged between 100 600 in the Netherlands and 5 800 in Romania, with the EU-27 average
standing at around 22 700 (see Figure 1.1).
While the main advantage of FNVA as an indicator for measuring income developments lies
in its relative simplicity, it fails to account for differences in farm size, type of farming or
structural decline in the labour force in agriculture. To do so, FNVA is typically expressed per
AWU, which is nothing less than a measure of partial labour productivity. Viewed from this
angle, the general picture of sizeable income variability within the EU remains unaffected,
though the ranking of MS changes somewhat (Figure 1.2). Denmark, the Netherlands and the
UK registered the highest FNVA per AWU of 42 100, 35 800 and 32 700 respectively. This
is more than two or, in the case of Denmark, even three times the value of the average FNVA
per AWU for the EU-27 ( 13900), reflecting the predominance of highly productive
granivore production, specialist horticulture and milk sectors within the agricultural sector in
these three economies. At the other end of the spectrum, Bulgaria, Romania and Slovakia
displayed the lowest FNVA per AWU ( 3 800, 3650 and 1 600 respectively) as their
agriculture has remained largely oriented towards less productive types of farming, namely
mixed farming and other permanent crops. Note also that within EU-15, FNVA per AWU was
below the EU-27 average only in Greece and Portugal two MS that are characterised by a
large number of small farms.
Figure1.1: Farm net value added by Member State in 2009

(average per farm in )
FNVA
EU27 FNVA
105,000
90,000
75,000
60,000
45,000
30,000
15,000
RO
SI
PL
BG
CY
LT
LV
PT
EL
IE
HU
MT
EE
SK
ES
SE
AT
FI
IT
LU
FR
DE
BE
DK
UK
CZ
NL
Source: DG AGRI EU-FADN.
An alternative measure of agricultural holdings income, namely the remuneration of family

labour expressed per family work unit, sheds a significantly different light on farm income
distribution within the EU in 2009. Denmark, the MS with the highest FNVA per AWU,
actually displayed the lowest remuneration of family labour per FWU within EU-27
(- 44 300), caused by the large amount of interest paid by Danish farmers and the high level
of wages. The MS with the highest remuneration for family labour per FWU were the UK
( 23 000), Belgium and Italy ( 20 000 each). At EU-27 level, the average farm income stood
at 7 300 in 2009.
Figure 1.2: FNVA per AWU and remuneration of family labour per FWU by Member
State in 2009
50,000
40,000
FNVA/AWU
Remuneration of family labour/FWU
EU27 FNVA/AWU
EU27 Remuneration of family income/FWU
30,000
20,000
10,000
-20,000
-30,000
-40,000
-50,000
SK
BG
RO
SI
PL
LV
LT
CY
PT
EE
MT
EL
HU
CZ
IE
AT
ES
SE
FR
FI
IT
LU
DE
BE
NL
UK
-10,000
DK
Results by EU groups
EU-15 agricultural holdings income, whether measured by FNVA per AWU or the
remuneration of family labour per FWU, declined in 2009 for the second consecutive year to
21 000 and 11 000 respectively on the back of a sizeable drop in agricultural output prices.
These two consecutive years of declines actually wiped out most of the revenue gains
achieved over the period 1999-2007 and were primarily driven by decreases in FNVA / the
remuneration of family labour, as AWUs / FWUs had remained fairly stable. Farm income
developments in EU-10 closely mirrored the general pattern observed in EU-15, with the
2009 FNVA per AWU and the remuneration of family labour per FWU decreasing to 5 700
and 3 400 respectively. It is worth pointing out that without the increase in (net) subsidies in
both EU-15 and EU-10, the negative income developments observed in 2008-2009 would had
been even more pronounced. Regarding the convergence of revenues between EU-10 and EU15 (based on FNVA per AWU), farm income in EU-10 was growing at a faster pace than in
EU-15 over the period 2004-2007, though the level of income was actually diverging in
absolute terms between the two groups of MS. The opposite happened during 2008 and 2009:
agricultural holdings income registered larger falls in relative terms in EU-10 than in EU-15,
yet the gap in the levels of income actually narrowed slightly. To sum up, based on the
available FADN data over the period 2004-2009, no tangible convergence in nominal farm
income was observed between EU-10 and EU-15. Finally, contrary to the general trend
observed in EU-25, EU-2 farm income rose by roughly 50 % between 2007 and 2009 to stand
at 3 700 (FNVA per AWU) and 2 400 (the remuneration of family labour per FWU).
Figure 1.3: Long-term developments in FNVA per AWU and remuneration of family
labour per FWU
EU27 FNVA/AWU
EU15 FNVA/AWU
EU10 FNVA/AWU
30,000
EU27 Remuneration of family labour/FWU

25,000
20,000
15,000
10,000
5,000
0
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Regional differences
Map 1.1 shows the regional differences in FNVA per AWU within EU-27 in 2009. Based on
this indicator, the agricultural holdings with the highest incomes were mainly located in
Denmark, Belgium, the Netherlands, northern Germany, northern France, northern Italy, the
UK (England and Wales) and northern Spain (Castilla-Len). On the other hand, regions with
very low farm incomes (i.e. below 10 000 per year) were mostly, but not exclusively,
situated in EU-10 MS. However, Portugal (Norte e Centro), Greece (Ipiros-PeloponissosNissiIoniou) and Italy (Abruzzo) also registered very low average farm incomes.
Map 1.1: FNVA per AWU by FADN region in2009
When measured by the remuneration of family labour per FWU, the differences in 2009
income between EU-15 and EU-12 appear to be less pronounced (see Map 1.2). Northern
Italy, alongside north-eastern Germany, England, two Spanish regions (Castilla-Len and
Comunidad Valenciana) and southern Belgium (Wallonia), registered the highest income per
unit of family labour. While income levels tend to be lower in eastern and southern Europe,
many western European countries/regions (e.g. Denmark, southern Sweden, the Netherlands,
Ireland, France, Austria and southern Germany) also displayed very low remuneration of
family labour per FWU, reflecting higher wages and land rents.
Map 1.2: Remuneration of family labour per FWU by FADN region in 2009
Results by type of farming

Figure 1.4 depicts large discrepancies in FNVA per farm across different types of farming. In
particular, average farm income was approximately four times larger in the horticulture sector
than in the mixed crops and livestock sector. One possible explanation for the relatively low
income of mixed farms is that many of them are typically very small and mainly located in
EU-10, where income levels tend to be generally lower. On the other hand, horticulture
holdings appear to be more frequent in EU-15.
When measured by FNVA per AWU, the general picture of income distribution by type of
farming remains little changed (see Figure 1.5). The granivore, wine and horticulture sectors
continued to display above--average incomes, while permanent crops other than wine and
mixed farms income remained below the average. Note that FNVA per AWU declined for all
types of farming in 2009 compared to 2008 levels, except for granivore farms, which
registered an almost 20 % increase in income as feed prices dropped in roughly equal
proportions. The remuneration for family labour per FWU, which by definition remains below
FNVA per AWU, does not significantly alter the picture of relative productivity differences
across various types of farming of different types of holdings (with granivores, horticulture
and wine holdings remaining at the top of the spectrum, and mixed farms at the bottom).
Figure 1.4: FNVA per farm in EU-27 by type of farming in 2009

FNVA
EU27 FNVA
70,000
60,000
50,000
40,000
30,000
20,000
10,000
0
Horticulture
Granivores
Wine
Milk
Grazing
livestock
Fieldcrops
Other
Mixed (crops
permanent and livestock)
crops
Figure 1.5: FNVA per AWU by type of farming in 2009

30,000
FNVA/AWU
25,000
20,000
15,000
10,000
5,000
0
Granivores
Wine
Horticulture
Milk
Grazing
livestock
Fieldcrops
Other
permanent
crops
Mixed (crops
and livestock)
Results by organisational farm and EU group

From the organisational point of view, holdings in the FADN are divided into three groups:
(1) family farms, where the profits cover the unpaid labour and own capital of the holder and
the holders family; (2) partnerships, where the profits cover the production factors brought
into the holding by a number of partners (at least half of whom participate in the work of the
farm as unpaid labour); and (3) other holdings with no unpaid labour or which are not
included in the other two groups (e.g. legal persons).
The results show that non-family farms generated, on average, higher FNVA than family
farms, with income disparities particularly visible in EU-10 and, to a lesser degree, in EU-15
and EU-2. The observed disparities both across and within the three groups of MS mainly
10
reflect differences in farm size. While holdings classified as other displayed the largest
FNVA within each group of MS, income of these large commercial farms in EU-10
significantly exceeded the FNVA created by the corresponding group of holdings in EU-15
and EU-2 ( 168 000 as compared to 116 000 and 23 000 respectively). On the other hand,
EU-15 partnerships and especially family farms had, on average, significantly higher incomes
that their counterparts in new Member States.
Figure 1.6: FNVA per farm by EU group and organisational form in 2009
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
EU15
EU10
EU2
11
EU27
Total
Other
Partnerships
Family farms
Total
Other
Partnerships
Family farms
Total
Other
Partnerships
Family farms
Total
Other
Partnerships
Family farms
When FNVA is weighted by AWU, the conclusion that non-family farms tend to display
higher incomes than family farms remains valid across different EU groups (see Figure 1.7).
The FNVA per worker (a measure of partial labour productivity) is greater in EU-15 than in
EU-10 or EU-2, irrespective of the organisational type of farm a phenomenon that can be
explained partially by the larger labour force employed by holdings in the new Member
States.
Figure 1.7: FNVA per AWU and remuneration of family labour per FWU by EU group
and organisational form
35,000
FNVA/AWU
30,000
25,000
20,000
15,000
10,000
5,000
EU15
EU10
EU2
12
EU27
Total
Other
Partnerships
Family farms
Total
Other
Partnerships
Family farms
Total
Other
Partnerships
Family farms
Total
Other
Partnerships
Family farms
1.2.
Distribution of income
As depicted by box-plots2 in Figure 1.8, agricultural incomes vary considerably across

farms. The general pattern is that a large proportion of farms display a relatively low income
level per worker, while a small proportion of holdings record a very high income level per
worker.
For instance, the average EU-15 FNVA per AWU stood at around 21 000 in 2009. However,
10 % of the farms had an income per worker of more than 42 800, while half of the farms
recorded FNVA per AWU below 12 400.
In line with past regularities, the EU-10 and EU-2 average income per worker remained
significantly below the EU-15 level. Alternatively, more than 95 % of farms in both EU-10
and EU-2 had an income which was below the average FNVA per AWU observed in EU-15.
While FNVA per AWU is also unevenly distributed in the new MS, the degree of income
disparity was less pronounced compared to EU-15. The EU-10 average income per worker
stood at around 5 700, though more than 50 % of holdings had an income per worker of less
than 2 700. In EU-2, half of the farms returned FNVA per AWU of less than 2 100.
Figure 1.8: Distribution of FNVA per AWU by EU groups in 2009
Figure 1.9 (see next page) shows developments in income distribution for the EU as a whole
over the period 1999-2009. Until 2003, income discrepancies in EU-15 were gradually rising
along with the average farm income. However, the average level of income dropped markedly
and income discrepancies narrowed somewhat following the 2004 enlargement. The structural
impact of the 2007 accession of Romania and Bulgaria is less visible in the data owing to
their lower relative weight with respect to the size of the EU at that time and a favourable
general income situation during that year. Finally, the impact of a sizeable drop in agricultural
output prices is clearly visible in the 2009 data, as evidenced by a strong decline in the
In the box plots the inter quartile range (range between 25 % of farms and 75 % of farms) is indicated by the
yellow box; the limits of 10 % of farms and 90 % of farms corresponds to the end of lines (whiskers); the
median (50 % of farms) is the line crossing the yellow boxes, and the mean corresponds to the + sign.
13
average income level and a less uneven, though still highly asymmetrical, income
distribution.
Figure 1.9: Distribution of FNVA per AWU by year
Figure 1.10: Distribution of FNVA per AWU by type of farming in EU-15 in 2009
Legend:
1 = Field crops
2 = Horticulture
3 = Wine
4= Other permanent crops
5= Milk
6= Other grazing livestock
7= Granivores
8= Mixed
Figure1.10 illustrates the distribution of income by type of farming in 2009. In general terms,
income distribution remains highly asymmetrical within each of the eight sectors typically
distinguished in the FADN (i.e. a small proportion of farms with a very high income and a
large proportion of farms with low incomes3). The degree of these income discrepancies
3
While the high-income farms substantially raise the average income level, they have only limited impact on
the median level of income (within a given sample, a single outlier will actually distort the average but will
have no impact on the median).
14
greatly varies across different types of farming. As in the previous years, the most pronounced
differences between the mean and median values of income are observed for granivores
farms. Though, the distribution of income is also highly uneven within the milk, field-crop
and mixed sectors (i.e. sectors with a large interquartile range for FNVA per AWU).
The trend in the distribution of income over time varies from sector to sector. As shown in
Figure 1.11, the distribution of income for specialised dairy farms widened progressively until
2007. Since then, the degree of income asymmetries has diminished along with the reductions
in mean and median income levels. These developments were predominantly driven by
increasing input prices in 2008 and declines in milk prices in 2009.
Figure 1.11: Distribution of FNVA per AWU of dairy farms in EU-15 by year
Figure 1.12: Distribution of FNVA per AWU of field crop farms in EU-15 by year
15
As shown by Figure 1.12, the average income of specialised field-crop farms followed overall
a very gradual upward trend between 1999 and 2009. This long-run tendency masks in
particular large changes in income distribution in 2007, which were triggered by spikes in
cereals prices.
In the case of farms specialised in granivore production, the degree of income asymmetries as
well as the mean and median levels of income fluctuated substantially over time, mainly
reflecting large swings in output prices (Figure1.13). Income fell to a particularly low level in
2007 as the dampening effect of extremely high feed prices more than outweighed the
favourable impact of higher output prices. Overall, the income distribution tends to widen in
years characterised by high income. This suggests that some farms can benefit more from the
favourable situation than others, probably due to economies of scale.
Figure 1.13: Distribution of FNVA per AWU of granivore farms in EU-15 by year
Figure1.14 (see next page) illustrates the distribution of income (FNVA) among the labour
force (AWU) in EU-27 in 2009 by means of a Lorenz curve.4 As the 2009 income of a large
share of the farm labour force was negative, so too is the cumulated share of income up to a
certain point.
The Lorenz curve shows that income is unevenly distributed among the labour force:5 80 % of
the labour force generated approximately 35 % of income of the whole agricultural sector. The
remaining 20 % thus realised 65 % of FNVA. Finally, note that FNVA per AWU was negative
for about 32 % of total AWU employed in EU agriculture.
In order to draw the Lorenz curve, the income estimates are sorted in ascending order. Each observation is
weighted according to the weighting factor of the farm and the number of workers employed.
If income were equally distributed within the labour force, the Lorenz curve would become a straight line
linking the origin to the top right corner in the Figure.
16
Figure 1.14: Lorenz curve of the distribution of FNVA in EU-27 in 2009
Cumulated share of total FNVA[%]
100
80
60
40
20
0
0
10
20
30
40
50
60
70
80
90
100
-20
Share of AWU[%]
An alternative measure of the statistical dispersion of income is the Gini index,6 which can be
between 0 and 1. The coefficient of 0 expresses perfect equality of income among the labour
force, while the coefficient of 1 reflects maximum inequality (with one work unit capturing
the entire income of the sector).
Table 1.1 shows that the income concentration in EU-15 is typically lower than in EU-10 or
EU-2, with the latter group displaying the highest income concentration (unequal
distribution). Though comparisons between groups should be made with caution, the observed
differences partly reflect disparities in the structure of the farm sector. For instance, the
sample includes very small farms in EU-10 and EU-2, which are mostly excluded in EU-15.
Looking at the development of the coefficient over time within each EU group, income
concentration has changed little in EU-15 since 1999. In EU-10, the income disparities had
been narrowing following EU accession (due, in part, to increasing CAP support) though the
initial declines were almost completely reversed over the last two years under review. Finally,
farm income inequalities in EU-2 have continued to narrow since EU accession in 2007.
Table 1.1:
EU15
EU10
EU2
Development of the Gini coefficient of FNVA per AWU by EU groups
1999
0.540
2000
0.525
2001
0.520
2002
0.496
2003
0.517
2004
0.516
0.636
2005
0.520
0.621
2006
0.521
0.589
2007
0.524
0.574
0.725
2008
0.529
0.620
0.695
2009
0.544
0.633
0.687
The Gini coefficient is usually based on the Lorenz curve. It can be thought of as the ratio of the area that
lies between the line of equality and the Lorenz curve over the total area below the line of equality.
17
1.3.
Income components
Results by EU groups
Figure 1.15 illustrates the composition of farm receipts and expenses by EU groups in 2009. It
shows that an average farm operated at a loss (after the remuneration of own factors)
irrespective of the EU group considered.
On the revenue side, the average receipts per farm in EU-27 stood at 66 600, out of which
total output and public support7 represented 55 900 (84 %) and 10 700 (16 %) respectively.
These aggregated figures mask large differences, both in absolute and relative terms, among
the EU groups: the average farm revenue in EU-2 was roughly 2.5 / 6 times lower than in EU10 and EU-15 respectively. In relative terms, subsidies accounted for more than 21 % of
average farm revenue in EU-10 as compared to roughly 15 % in both EU-15 and EU-2.
Figure 1.15: Income components per farm by EU groups in 2009
120,000
100,000
80,000
60,000
40,000
20,000
0
Receipts
Expenses
EU27
Total output
Depreciation
Receipts
Expenses
Receipts
EU15
Expenses
EU10
Public support
Total external factors
Receipts
Expenses
EU2
Total intermed. Consumption

Own factors
On the cost side, average farm expenses totalled 73 600 in EU-27. While this aggregated
figure again reflects highly contrasting price levels among the EU groups, the cost structure as
such has been found to be broadly similar within the EU. Intermediate consumption
represented approximately 50 % of the total expenses. Depreciation and expenses for external
factors8 accounted for approximately 10 % each. The remainder is accounted for by the
(estimated) opportunity costs of own factors (family labour, own land and own capital). It is
worth noting that, in relative terms, the opportunity costs for own family labour were highest
in EU-2, for own land in EU-15 and for own capital in EU-10. This reflects, among other
things, differences in farm size, type of farming and the relative prices of input factors across
the EU groups.
Public support is the sum of net current and investment subsidies. It includes EU coupled and decoupled
payments, less favoured area (LFA) payments, rural development payments and national aid.
Expenses for external factors include wages, rent and interest paid.
18

In 2009, granivore farms not only generated the largest output of all farm types in EU-27
( 194 000) but were also the only type operating at a profit after the remuneration of own
factors of production, as shown by Figure 1.16. On the other end of the spectrum, permanent
crops other than wine holdings returned the lowest output, namely 28 000. The highest
average loss per farm was recorded by specialised dairy farms ( -14 400) though, in relative
terms, mixed crops and livestock farms were the most affected, with the average loss
representing almost 16 % of the total revenues.
As to the average direct payments per holding, grazing-livestock farms benefitted from most
subsidies ( 17 650), followed by specialised dairy and field crops farms ( 17 500 and
13 000 respectively). On the other hand, the horticulture sector received, on average, the
least public support ( 2 000).These discrepancies in subsidies across sectors still reflects the
past features of the CAP, which provided support in particular for the production of cattle and
field crops: in many MS, decoupled direct payments per hectare have remained linked to the
historical level of support received by farms.
Figure 1.16: Income components per farm by type of farming in 2009
225,000
200,000
175,000
150,000
125,000
100,000
75,000
50,000
25,000
0
Rec
Exp
Fieldcrops
Rec
Exp
Horticulture
Total output
Rec
Exp
Wine
Public support
Rec
Exp
Rec
Other
permanent
crops
Exp
Milk
Total intermed. consumpt.
Rec
Exp
Grazing
livestock
Depreciation
Rec
Exp
Granivores
Rec
Exp
Mixed (crops
and livestock)
Rec
Exp
Total Groups
Own factors
Source: DG AGRI EU- FADN.

Note. Receipts (Rec), Expenses (Exp).
The cost structure varies markedly among sectors, reflecting differences in farm size,
technological processes and input prices. Granivore farms (typically large in size with
technological processes involving a high turnover of animals) had the highest costs for
intermediate consumption (due to feed costs), both in absolute and in relative terms ( 136 300
or nearly 70 % of the total expenses). On the other side of the coin, intermediate consumption
totalled, on average, 10 000 (or represented less than 30 % of the total cost) for other
permanent crop farms. Interestingly, depreciation costs were, in relative terms, broadly
constant across sectors, accounting for around 11 % of total expenses. The share of external
factors (wages, rent and interest paid) in total costs was particularly high in the horticulture
and wine sectors (somewhat above 20 %) due mainly to for the high cost of external labour.
On the other hand, other grazing livestock and granivore farms were the type of farms with
the lowest share of expenditure on external factors (around 8 %). In absolute terms,
horticulture holdings returned the largest external factors costs ( 37 000), while other grazing
livestock and other permanent crops farms spent the least (both less than 6 000). Finally, the
19
estimated costs of own production factors (family labour, own land and own capital), as a
share of total costs, were highest in permanent crop other than wine farms (above 40 %) and
lowest in granivore farms and horticulture holdings (around 15 %).
1.4.
Return on assets
Return on assets (ROA) measures the

effectiveness of a companys assets in
generating revenue. It is defined as the ratio
of net income over total assets, with net
income being defined as the sum of FNVA
and net subsidies less wage costs, rent paid
and the opportunity costs for own labour.
ROA=
FNVA
+ Balance of subsidies and taxes
- Wages paid
- Paid rent
- Opportunity costs for family labour
Total assets

As shown by Figure 1.17, the ROA of an average EU-27 farm declined sharply to 0.4 % in
2009, down from 1.8 % a year earlier. Holdings in the Baltic countries, Hungary, Romania
and Bulgaria typically tend to display the largest ROAs, mainly due to relatively low levels of
opportunity costs and asset values. On the other hand, 13 Member States registered a negative
ROA in 2009 (as compared to six in the previous year), with Slovakia and Sweden having the
lowest ROA in the EU (see Annex 8 for more details).
Figure 1.17: Rate of return on assets by MS in 2008 and 2009
12%
2008
2009
2009 Average EU27
9%
6%
3%
SK
SE
FI
SI
FR
DK
MT
IE
NL
PL
LU
CY
CZ
LV
PT
DE
AT
UK
ES
EE
IT
BE
EL
RO
HU
BG
LT
0%
-3%
-6%
-9%
-12%
-15%

The ROA varied considerably across different farm types (see Figure 1.18). Granivore,
horticulture and wine farms have continued to display above-the-average levels of ROA. In
particular, the ROA of granivore holdings (4.9 %) was nearly 12 times greater than the
average for the whole agricultural sector in EU-27 (0.4 %). Other permanent crops, and mixed
crops and livestock holdings were the only two types of farms that registered negative a ROA
in 2009 (-0.1 % and -0.9 % respectively).
20
Figure 1.18: ROA in EU-27 by type of farming in 2009

5.0%
4.5%
ROA
2009 Average EU-27
4.0%
3.5%
3.0%
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
-0.5%
-1.0%
Granivores
Horticulture
Wine
Milk
Grazing
livestock
Fieldcrops
Other
permanent
crops
Mixed (crops
and livestock)
Trend by EU group
As shown by Figure 1.19, ROA also displayed marked fluctuations not only among the EU
groups but also over time for a given group, especially during the latest years included in the
sample, reflecting higher volatility of macroeconomic fundamentals as well as weather-related
factors (e.g. a drought in Bulgaria and Romania during 2007). A tentative upward trend could
be distinguished in the case of ROA developments in EU-15 before turbulent economic
conditions considerably compressed the return in 2009. Note also that ROA in all EU groups
has remained at relatively low levels compared to other sectors of the economy.
Figure 1.19: Development of the ROA by EU groups
6%
EU27
5%
EU15
EU10
EU2
Linear (EU15)
4%
3%
2%
1%
0%
-1%
-2%
-3%
1999
2000
2001
2002
2003
2004
21
2005
2006
2007
2008
2009
2.
IMPORTANCE OF DIRECT PAYMENTS FOR FARM INCOME
This chapter analyses the impact of direct payments (DP) on the income situation of European
farmers. Two concepts of income are considered in turn, namely farm revenue and FNVA.
2.1.
Share of direct payments in total revenue

The share of DP in total revenue (output plus net current and investment subsidies) in EU-27
rose from 12.1 % in 2008 to 13.5 % in 2009 as total farm receipts dropped substantially, while
the level of public support increased slightly. This share varies widely among Member States,
with Irish farms total receipts being proportionately most dependent on subsidies (which
represent nearly 25 % of total revenue). The importance of crops such as tobacco, grain maize
and cotton, which used to be strongly supported before decoupling, is the main explanatory
factor behind the high share of DP in total revenue observed in Greece. In Finland, the large
share of public support in total receipts mainly reflects substantial national payments, which
are granted in addition to EU direct payments. Finally, DP account for the lowest share of
total revenue in the Netherlands (close to 4 %), where sectors with a lower share of DP in total
revenue, such as horticulture, pig and poultry production, represent a significant proportion of
total agricultural output.
Figure 2.1: Share of public support in total receipts by MS in 2009
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
%Public support on receipts
%Output on receipts
NL
MT
IT
CY
BE
DK
AT
SI
RO
LU
DE
UK
EE
PL
PT
ES
SE
FR
HU
CZ
BG
LT
LV
FI
SK
EL
IE
0%
EU27% of public support
Source: DG AGRI EU-FADN

As already indicated, the share of DP in revenue varies markedly across types of farming,
reflecting mainly differences in average farm size. In addition, in EU-15, the historical model
of the CAP was characterised by asymmetrical direct support across sectors an element
which has been gradually smoothed following the 2004 reform. Figure 2.2 (see next page)
shows that public support accounts for the highest share of total revenue in grazing livestock
(26 %) and field crops farms (22 %). On the other hand, subsidies represent only a very
limited part of total revenue in the wine and horticulture sectors (2 % and 1 % respectively).
22
Figure 2.2: Share of direct payments in total receipts by type of farming in 2009
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Grazing
livestock
Fieldcrops Mixed (crops

and
livestock)
%Public support on receipts
Milk
Other
Granivores
permanent
crops
%Output on receipts
Wine
Horticulture
Total Groups % of public support
2.2.
Share of direct payments in FNVA
The role direct payments play in sustaining farm revenue becomes even more apparent when
we look at their share in FNVA a concept which measures net farm income, i.e. after
deduction of costs (see Annex 2). Consequently, changes in direct payments will, all other
things being equal, have a much larger impact on FNVA than total farm revenue.
In 2009, DP accounted on average for nearly 40 % of FNVA in EU-27, up from 33 % in 2008
(Figure 2.3). This steep increase is due largely to a sizeable drop in FNVA in difficult
economic conditions. In particular, the share of DP in FNVA rose sharply to 444 % in
Slovakia in 2009 (up from 69 % a year earlier), following a 25 % increase in the amount of net
subsidies in combination with a more than 80 % drop in FNVA (caused mainly by a sharp
contraction in both crops and livestock production). On the other hand, direct payments
represented only 15 % of FNVA in the Netherlands, reflecting the orientation of the Dutch
sector towards (highly profitable and) less subsidised sectors, such as horticulture and pig and
poultry production. Finally, Map 2.1 illustrates the regional differences in the share of DP in
FNVA. The latter was lowest in Hamburg (1 %), followed by Liguria and Trentino (2 % and
4 % respectively).
23
Figure 2.3: Share of direct payments in FNVA by MS in 2009

500.00%
450.00%
% Public support in FNVA
EU 27
400.00%
350.00%
300.00%
250.00%
200.00%
150.00%
100.00%
50.00%
Map 2.1: Share of direct payments in FNVA by FADN region in 2009
24
IT
NL
MT
CY
BE
ES
RO
PT
AT
EL
PL
BG
DK
SI
UK
LT
DE
LU
HU
FR
CZ
EE
LV
IE
SE
FI
SK
0.00%

The share of direct payments in agricultural income also fluctuates markedly with the type of
farming (Figure 2.4). In particular, public subsidies represent a substantial part of FNVA in
field crops, mixed farming, grazing livestock and specialised dairy farms as a result of
historical orientations of the CAP. On the other hand, direct payments play only a limited role
in sustaining income within the wine and horticulture sectors.
Figure 2.4: Share of direct payments in FNVA by farm type in EU-27, 2009
70%
%Public support inFNVA
60%
EU 27
50%
40%
30%
20%
10%
0%
Fieldcrops Mixed (crops
and
livestock)
Grazing
livestock
Milk
25
Other
permanent
crops
Granivores
Wine
Horticulture
3.
FARM STRUCTURE
3.1.
Financial structure
This chapter analyses the financial structure of agricultural holdings within the EU by
reference to two main dimensions (country and type of farming) and by means of a number of
financial indicators derived from farms balance sheets.
3.1.1. Total asset value
Total assets are the property of the agricultural holding and are calculated as the sum of
current and fixed assets. Current assets in the FADN include non-breeding livestock, stock of
agricultural products and other circulating capital, holdings of agricultural shares, and
amounts receivable in the short term or cash balances in hand or in the bank. Fixed assets are
agricultural land, permanent crops, farm and other buildings, forest capital, machinery and
equipment, and breeding livestock.
Long-term developments by EU group
Figure 3.1 shows that the value of total assets (TA) has been following an upward trend in
both EU-15 and EU-10. In the former, the average value of total assets rose by more than
50 % over the period 1999-2009, while in the latter it increased by nearly 80 % between 2004
and 2009.
Figure 3.1: Long-term developments in the value of total assets (TA) and liabilities (TL)
EU15 TA
EU15 TL
EU10 TA
EU10 TL
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009

As shown by Figure3.2, the total value of assets of an average EU-27 farm stood at
approximately 288 300 in 2009. However, this average masks sizeable variations across
Member States on the back of differences in the structure of national agricultural sectors.
Danish and Dutch farms held, on average, the most assets (around 2 400000 and 1 945 000
respectively), reflecting very high land prices as well as the importance of types of farming
which typically necessitate considerable investments, such as milk, granivore or horticulture
26
production. By contrast, farms in Bulgaria and Romania had the lowest total assets (under
50 000) as they are, on average, relatively smaller and predominantly oriented towards less
capital-intensive types of farming. Moreover, these low total assets have also partly reflected
the lower general price level in EU-2.
Figure 3.2: Average total asset value per farm by MS in 2009
2,500,000
2,250,000
Total assets
EU27 Total assets
2,000,000
1,750,000
1,500,000
1,250,000
1,000,000
750,000
500,000
250,000
RO
BG
EL
PT
LV
LT
PL
HU
CY
SI
EE
ES
IT
MT
FR
FI
AT
BE
SE
CZ
DE
SK
IE
LU
UK
NL
DK

Dairy and granivore farms have typically held the highest total assets roughly three times
the assets of other permanent crops farms, which posted the lowest value. These disparities
are due, among other things, to differences in the typical degree of production process capital
intensity across sectors.
Figure 3.3: Average total asset value by type of farming in EU-27in 2009
600,000
Total assets
EU27 Total assets
500,000
400,000
300,000
200,000
100,000
0
Milk
Granivores
Horticulture
Grazing
livestock
27
Wine
Fieldcrops
Mixed (crops
Other
and livestock) permanent
crops
3.1.2. Total liabilities

In EU-27, total liabilities have, on average, accounted for a small proportion of farms
funding sources. In this respect, it is worth pointing out that while the 2004 and 2007
enlargements have affected the average level of total liabilities per farm, the impact has been
substantially smaller than on total assets per farm.
In line with the general trend for total asset values (see Figure 3.1), total liabilities have also
edged up, albeit at a slower pace, in both EU-15and EU-10.
In EU-27, average liabilities per agricultural holding rose to 44 000 in 2009, up from
43 250 in the previous year. As illustrated by Figure 3.4, both the total amount and
composition of liabilities show wide variations across Member States. In absolute terms, the
Danish and Dutch farms had, on average, the greatest total liabilities within the EU. By
contrast, total liabilities per farm remained very low in many Mediterranean Member States,
which could, prima facie, reflect difficulties farmers have in accessing credit markets in these
countries. However, these very low observed levels could also result from different
accounting practices, where liabilities are typically included in farmers private rather than
farm accounts.
Agricultural holdings relied most on short-term loans to finance their activities in Hungary,
Portugal, Slovakia, the UK and Lithuania (with short-term loans accounting, on average, for
around half of total liabilities). By contrast, medium- and long-term loans represented more
than 90 % of total liabilities in Belgium, Italy, Slovenia, Cyprus, Denmark and Finland.
Figure 3.4: Composition of liabilities per farm by MS in 2009
1,300,000
1,200,000
Long & medium-term loans
Short-term loans
1,100,000
1,000,000
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
EU27
EL
PT
RO
SI
IT
CY
ES
PL
BG
LT
MT
IE
LV
HU
AT
EE
FI
FR
UK
DE
SK
BE
LU
CZ
SE
NL
DK

As shown by Figure 3.5, granivore, horticulture and specialised dairy farms had, on average,
the highest total liabilities ( 139 500, 117 700 and 101 500 respectively), which in fact
mirrored the high total asset values observed in these farm types. Permanent crops other than
wine holdings recorded the lowest liabilities in 2009 ( 6 700). Regarding the composition of
28
liabilities, wine holdings relied most on short-term loans to finance their activities, while the
specialised dairy farms did so least (these loans accounted for around 45 % and 15 % of total
liabilities respectively).
Figure 3.5: Composition of liabilities per farm in EU-27 by type of farming in 2009
140,000
Long & medium-term loans
Short-term loans
120,000
100,000
80,000
60,000
40,000
20,000
0
Granivores Horticulture
Milk
Mixed
(crops and
livestock)
Wine
Fieldcrops
Grazing
livestock
Other
permanent
crops
Total
3.1.3. Development of farm net worth

Farm net worth is defined as the difference between total assets and total liabilities at the end
of the accounting year. In 2009, the average farm net worth stood at approximately 244 000
in EU-27 (+0.7 % compared to 2008). The average net worth per agricultural holding was
highest in the Netherlands, the UK and Denmark (Figure 3.6), reflecting the importance of the
granivore and milk sectors, which are characterised by above-average net worth per farm
(Figure 3.7 on the next page). The lowest values were registered by Romanian and Bulgarian
farms.
Figure 3.6: Farm net worth per farm by EU group and MS in 2005 and 2009
1,250,000
1,125,000
2008
2009
EU27 2009
1,000,000
875,000
750,000
625,000
500,000
375,000
250,000
125,000
29
BG
RO
LV
EL
PT
LT
HU
PL
EE
CY
SI
FR
FI
MT
IT
ES
AT
BE
SE
CZ
DE
IE
SK
LU
DK
NL
UK
Figure 3.7: Farm net worth per farm in EU-27 by type of farming in 2009
450,000
400,000
2009
EU27 2009
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0
Milk
Granivores
Grazing
livestock
Wine
Fieldcrops
Horticulture Mixed (crops

Other
and livestock) permanent
crops
3.1.4. Solvency
In the present analysis, solvency is measured by the liabilities-to-assets ratio. This gives an
indication of a farms ability to meet its obligations in the long term (or its capacity to repay
liabilities if all of the assets were sold). The results should be interpreted with caution as a
high liabilities-to-assets ratio is not necessarily a sign of a financially vulnerable position. In
fact, a high ratio could also be an indication of a farms economic viability (i.e. its ability to
access outside financing), though there is certainly a threshold beyond which indebtedness
will compromise a farms financial health.
A high liabilities-to-assets ratio typically reflects heavy recourse to outside financing (i.e.
taking out loans). While the higher leverage (the amount of debt used to finance assets) helps
a farm to invest and typically increase its profitability, it comes at greater risk as leveraging
magnifies both gains (when investment generates the expected return) and losses (when
investment moves against the investor9).
As for other farm financial indicators, the liabilities-to-assets ratio varies substantially across
Member States and in some cases even within Member States, as shown by Map 3.1 (see next
page). Farms in Denmark, France and the Netherlands had the highest liabilities-to-assets
ratio (at 52 %, 39 % and 38 % respectively). The lowest average solvency levels were
observed in many Mediterranean Member States (below 3 %). As has already been indicated,
these very low levels of indebtedness, and by extension of solvency, could stem from the fact
that in these Member States liabilities are typically not included in the farm accounts but in
the private accounts of farmers.
For example, due to unfavourable weather conditions or outbreaks of animal diseases.
30
As depicted by Figure 3.8, the level of solvency also varies markedly across farm types, with
horticulture, granivore and specialised dairy farms recording the highest liabilities-to-assets
ratios, though the latter remained overall at relatively restrained levels (below 50 %, which
means that most farms assets were financed through equity).
Map 3.1: Average liabilities-to-assets ratio per farm by FADN region in 2009
Figure 3.8: Farm solvency in EU-27 by type of farming in 2009

2009
EU27 2009
40%
35%
30%
25%
20%
15%
10%
5%
0%
Horticulture
Granivores
Milk
Mixed (crops
and livestock)
31
Fieldcrops
Wine
Grazing
livestock
Other
permanent
crops
3.1.5. Current and fixed assets

Fixed assets10 account for the largest proportion of total assets in all Member States (see
Figure 3.9). In particular, the total farm assets in Greece, Ireland and Slovenia consist almost
exclusively of fixed assets (around 95 %).
Figure 3.9: Composition of assets by MS in 2009
Fixed assets
Current assets
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
EU10
EU2
EU27
EU15
SK
SK
EU27
FR
BG
HU
LV
ES
LT
CZ
AT
SE
EE
RO
FI
LU
DE
CY
PT
BE
DK
IT
NL
UK
PL
MT
SI
IE
EL
0%
Figure 3.10: Composition of fixed assets by MS in 2009

Land, perma. Crops & quotas
Buildings
Machinery
Breeding livestock
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
CZ
EE
LT
AT
FR
RO
LV
BG
HU
FI
MT
BE
LU
SE
SI
PL
PT
DE
EL
NL
IT
DK
CY
ES
UK
IE
0%
The composition of fixed assets across MS depends, on the structure of the agricultural sector.
As shown by Figure 3.10, land, permanent crops and quotas were the largest component in
10
Fixed assets include agricultural land, farm and other buildings, forest capital, machinery and equipment and
breeding livestock.
32
most Member States in 2009. In particular, this category made up more than 80 % of fixed
assets in Ireland, the United Kingdom and Spain. On the other hand, buildings were of
major importance in Austria, the Czech Republic, Romania and Slovakia (in the range 45 % to
50 %). Machinery accounted for the largest share of fixed assets in Lithuania (more than
50 %). Finally, breeding livestock was the smallest component of fixed assets in all Member
States (its share ranged from 15 % in France to 1.5 % in Denmark).
It should be stressed at this juncture, though, that accounting practices vary markedly across
Member States. For instance, quotas are not marketable in some countries (e.g. France), in
which case they are not recorded as a separate asset of a farm, although their value is partly
included in the land value. Consequently, the value of the land, permanent crops and quotas
component is underestimated compared to countries with marketable quotas (e.g. the
Netherlands). There are also differences in the recording of data relative to land. For example,
in France, farmers in some cases establish holdings that rent land to their members, in which
case the value of the land is not included in the total assets of these holdings. This accounting
practice thus increases the relative share of other assets.
As illustrated by Figure 3.11, fixed assets accounted overall for 82 % of total assets in 2009.
This share showed some variability among the different types of farming, ranging from 87 %
in specialised dairy farms to 70 % in wine holdings.
Figure 3.11: Composition of assets by type of farming in 2009
Fixed assets
Current assets
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Milk
Grazing
livestock
Fieldcrops
Mixed (crops
and livestock)
33
Other
permanent
crops
Horticulture
Granivores
Wine
Total Groups
Regarding the composition of fixed assets, Figure 3.12 shows that land, permanent crops and
quotas was the largest component in all farm types, though the share varied from more than
80 % in other permanent crops farms to about 50 % in granivore farms. On the other hand,
the latter had the largest share of buildings (35 %) and the former the lowest (10 %).
Horticulture holdings recorded the largest share of machinery in fixed assets (about 17 %),
virtually twice as much as on other permanent crops farms, which was at the other end of
the spectrum. Finally, breeding livestock accounted for the highest share of total assets in
grazing livestock and dairy farms (somewhat below 10 %).
Figure 3.12: Composition of fixed assets by type of farming in 2009
Land, perma. Crops & quotas
Buildings
Machinery
Breeding livestock
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Other
permanent
crops
Fieldcrops
Wine
Grazing
livestock
Milk
Mixed (crops Horticulture

and livestock)
Granivores Total Groups
3.2.
Labour
This section analyses the structure of the labour force employed by EU farms, focusing on the
average labour employed per farm, the composition of the labour force and the wages paid.
The results show that the share of non-family labour in the total workforce is gradually
increasing in EU-15, reflecting structural changes and increasing farm sizes. While in EU-10
this share appears to be at comparable levels to EU-15, there is significantly higher variability
across Member States due to the predominance of very large farms in many eastern European
countries, which are often organised as legal entities.
34
3.2.1. Labour force

The labour input of holdings stood at 1.6 AWU in 2009, virtually unchanged from a year
earlier. As shown by Figure 3.13, it varied considerably across countries, ranging from 15.5
AWU in Slovakia to 1.1 AWU in Ireland. Besides Slovakia, Czech farms also returned a
significantly higher labour input compared to the remaining Member States (7.3 AWU),
reflecting the predominance of very large non-family agricultural holdings.
Figure 3.13: Labour input per farm (in AWU) by MS in 2009
16
Labour/farm
EU 27 Average
14
12
10
8
6
4
IE
EL
CY
IT
ES
FI
SE
PT
AT
RO
DK
SI
LU
PL
HU
LT
MT
FR
BE
LV
DE
UK
EE
BG
NL
CZ
SK

Figure 3.14 shows that labour input by type of farming was fairly close to the average
1.6 AWU per farm in all sectors apart from horticulture (with twice as much labour input).
Figure 3.14: Labour input per farm (in AWU) by type of farming in EU-27 in 2009
3.5
Labour/farm
Total Groups
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Horticulture
Granivores
Milk
Wine
35
Mixed (crops
and livestock)
Grazing
livestock
Fieldcrops
Other
permanent
crops

Traditionally a large part of the labour force employed in agriculture is family labour. Family
labour as a share of total labour is decreasing over time, though it still represents the prevalent
form of labour in most Member States with the exception of Slovakia, the Czech Republic,
Hungary, Bulgaria and Estonia. As Figure 3.15 shows, the share of paid labour in the total
labour force in these five countries was higher than 50 % sometimes significantly so.
Figure 3.15: Share of working hours of paid and unpaid labour by MS in 2009
Share of unpaid labour (family labour hours)
Share of paid labour
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
EU27
SK
CZ
HU
EE
BG
DK
NL
UK
DE
LV
FR
CY
IT
LT
ES
SE
FI
BE
MT
PT
RO
LU
PL
EL
AT
IE
SI
0%

As shown by Figure 3.16, the share of paid labour is highest in horticulture and wine
holdings, reflecting the typical recourse to seasonal workers. The share of paid labour is
typically lowest in grazing livestock and dairy farms.
Figure 3.16: Share of working hours of paid and unpaid labour in EU-27by type of
farming in 2009
Share of unpaid labour (family labour hours)
Share of paid labour
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Grazing
livestock
Milk
Mixed (crops Fieldcrops

and
livestock)
Other
permanent
crops
36
Granivores
Wine
Horticulture Total Groups
3.2.2. Remuneration of farm workers

Results by EU group
As shown by Figure 3.17, the nominal hourly wage followed an upward trend in both EU-15
and EU-10. In EU-15, the average nominal hourly wage rose by 37 % between 1999 and
2009, from 6.89 to 9.42. In EU-10, it stood at 3.38 in 2009, up from 2.17 in 2004 (an
increase of some 56 %). Conversely, the average EU-2 hourly wage oscillated in nominal
terms around 1.25 over the period 2007-2009. The average nominal hourly wage declined in
2009 only in EU-10 (by around 6.3 %), while it registered moderate increases in both EU-15
and EU-2 (+1.6 % and +2.6 % respectively). Finally, the average EU-27 nominal hourly wage
stood at 6.34 in 2009, compared to 5.97 in 2008 and 5.61 in 2007, i.e. an increase of
about 13.1 % over this period. Note that changes in the nominal wage more than made up for
price increases over the corresponding period, so that the real hourly wage rose by around 8 %
between 2007 and 2009 (EU-27 HICP inflation stood at around 4.7 % over this period).
Figure 3.17: Long-term developments in average nominal wages
EU27
EU15
EU10
EU2
Linear (EU15)
10
9
8
7
6
5
4
3
2
1
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009

As Figure 3.18 shows (see next page), the average hourly nominal wage differs widely within
EU-27. In 2009, it was highest in Denmark ( 22.0) and lowest in Romania ( 1.23). Note that
wages in all EU-12 MS as well as in Greece and Portugal were below the EU-27 average
( 6.34). Map 3.2 shows that the level of wages was highest in the north-west of Europe:
Denmark, the Netherlands, Sweden and the French region Champagne-Ardenne all had an
average hourly wage of above 15.0. The contrasting extreme was below 2.5 in Romania,
Bulgaria, the eastern regions of Poland, and Lithuania.
37
Figure 3.18: Average nominal wages of paid labour in 2009

Wages/hour
EU27 Avearge
23
20
18
15
13
10
8
5
3
Map 3.2: Average nominal wage by FADN region in 2009
38
RO
BG
PL
LT
LV
HU
EL
CY
PT
EE
SI
SK
CZ
MT
ES
AT
IT
DE
IE
BE
UK
LU
FR
FI
SE
NL
DK
3.3.
Land
For most farm types, access to agricultural land is a precondition for economic growth. This
subsection analyses the amount of agricultural land available per farm, trends in the
ownership of land and the cost of renting land.
3.3.1. Farm size
While it has already become clear throughout this chapter that the structure of farms varies
significantly across Member States, one of the most telling indicators of these differences is
the physical size of farms, measured by the amount of agricultural land per farm. Here again,
the overall picture is confirmed: based on the 2009 data, an average farm in Slovakia was
more than 160 times larger than its counterpart in Malta (575 ha vs 4 ha see Figure 3.19).
The EU average farm size was 32 ha in 2009, little changed from a year earlier.
Figure 3.19: Total farm UAA by Member State in 2009
(average per farm in ha)
600
UAA
EU27 UAA
500
400
300
200
100
MT
CY
EL
SI
RO
IT
PL
PT
BG
NL
AT
ES
IE
BE
LT
HU
FI
LV
FR
LU
DK
DE
SE
EE
UK
CZ
SK
DG AGRI EU- FADN
When measured by farm types, the average utilised agricultural land area was largest in
grazing-livestock farms, followed by field-crop farms. At the other end of the spectrum,
horticultural farms were the smallest. However, it is important to stress that they operate at a
much higher intensity (i.e. the land is a less important determinant of their level of
production).
39
Figure 3.20: Total UAA of farms by TF in 2009

(average per farm in ha)
60
UAA
EU27 UAA
50
40
30
20
10
0
Grazing
livestock
Fieldcrops
Milk
Mixed (crops
and livestock)
Granivores
Wine
Other
permanent
crops
Horticulture
DG AGRI EU- FADN.
3.3.2. Importance of rented land

Structural change is ongoing in the agricultural sector, as reflected by the steadily decreasing
number of farms. Consequently, the remaining active farms tend to get larger as they buy or
rent the land previously used by farms which have ceased farming.
Figure 3.21: Long-term developments in the share of rented land
(average per farm in %)
EU27
EU15
EU10
Linear (EU15)
54.0%
53.0%
52.0%
51.0%
50.0%
49.0%
48.0%
47.0%
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
As shown by Figure 3.21, the share of rented land in EU-15 has been fluctuating around an
upward trend, rising from about 50 % in 1999 to 53.5 % in 2009. This indicates that a large
part of the land becoming available on the EU-15 market is rented rather than sold. However,
the situation is the reverse in EU-10, as evidenced by a falling trend in the share of rented
land since 2004. Note that these averages for different EU groups mask considerable national
and regional disparities, as depicted by Map 3.3. Rented land as a proportion of total UAA is
40
very high in Slovakia (96 %11), France, eastern and central regions of Germany, the Czech
Republic, western Hungary and Bulgaria. Conversely, it is below 30 % in many southern
European regions, Ireland, Wales, Denmark, north-eastern Poland, Sud-Vest-Oltenia
(Romania) and the Hamburg region (Germany).
Map 3.3: Share of rented land in the total UAA by FADN region in 2009
3.3.3. Level of land rents

As land prices are often influenced by factors originating outside the agricultural sector, the
annual rent farmers have to pay for one hectare of land is typically considered as the best
proxy for the cost of land. Map 3.4 shows that the level of land rents differs markedly across
the EU regions. In 2009, the highest average land rent per ha was observed in the Netherlands
and Canarias (approximately 735 and 710 respectively). Land rents were also very high in
the Hamburg region (Germany), Denmark, Alto-Adige (Italy) and Ribatejo e Oeste
(Portugal), where they were well above 500 per ha. Rents were particularly low, on the other
hand, in the Baltic countries (below 30 per ha) and in many regions with unfavourable
conditions for intensive agricultural production, such as dry and mountainous areas.
In so far as rent reflects land scarcity, its level can be used as an indicator of the risk of land
abandonment. For instance, if land rents are high, it can be assumed that farming is profitable
and that there are enough farmers willing to use the land. On the other hand, if rents are low,
11
This very high share of rented land in total UAA reflects the business structure of Slovak agricultural
holdings (i.e. cooperatives renting land from their members).
41
this indicates that there is little potential for making economically profitable use of the land.
Hence, adverse changes in the economic environment are highly likely to result in land
abandonment.
Map 3.4: Average land rent in the FADN regions in 2009
Results by farm type

The level of land rents depends on several factors such as the scarcity of land, the degree of
competition between farmers in the local land market and the strength of demand for land
from different sectors. In areas where horticulture or wine production is of importance,
suitable land is scarce and land rents are much higher than, for example, in areas with
extensive grassland, as the profitability of horticulture and wine production is much higher.
Similarly, in areas with intensive livestock production, land prices tend to be higher because
additional land is often a precondition for expanding this production. This is mirrored in the
average level of land rents per farm type shown in Figure 3.22 on the next page.
42
Figure 3.22: Average land rent by farm type in 2009

(average per farm in per ha)
Rent/ha
Total Groups
1,000
900
800
700
600
500
400
300
200
100
0
Horticulture
Wine
Granivores
Other
permanent
crops
Milk
Fieldcrops
Mixed (crops
and livestock)
Grazing
livestock
Source: DG AGRI EU- FADN
Development by EU group
As shown in Figure 3.23, the level of land rents in EU-15 increased very gradually over the
period 1999-2009, from around 161 per ha to 175 per ha. However, this trend was more
pronounced in EU-10 during the period 2004-2009, despite a small decrease in the last
observed year: average land rent per hectare rose by more than 45 % during the period under
review, from around 33 to 49. In EU-2, land rents followed a hump-shaped pattern, with
the average per hectare falling to nearly 62 in 2009, yet remaining nearly 7 % above its 2007
level. All in all, average land rent has changed little since 2007 in the EU as a whole, standing
at around 143 per hectare.
Finally, note that the land rent figures discussed in this subsection are averages and do not
therefore necessarily reflect prices in new rental contracts (which can be well above the
average level observed in the FADN).
Figure 3.23: Long-term developments in land rents
(average per farm in per ha)
EU27
EU15
EU10
EU2
Linear (EU15)
200
175
150
125
100
75
50
25
0
1999
2000
2001
2002
2003
2004
43
2005
2006
2007
2008
2009
FIGURE INDEX
Figure 1.1: Farm net value added by Member State in 2009 .................................................. 6
Figure 1.2: FNVA per AWU and remuneration of family labour per FWU by Member State
in 2009 .................................................................................................................. 6
Figure 1.3: Long-term developments in FNVA per AWU and remuneration of family labour
per FWU................................................................................................................ 7
Figure 1.4: FNVA per farm in EU-27 by type of farming in 2009 ....................................... 10
Figure 1.5: FNVA per AWU by type of farming in 2009 ..................................................... 10
Figure 1.6: FNVA per farm by EU group and organisational form in 2009 ......................... 11
Figure 1.7: FNVA per AWU and remuneration of family labour per FWU by EU group and
organisational form ............................................................................................. 12
Figure 1.8: Distribution of FNVA per AWU by EU groups in 2009 .................................... 13
Figure 1.9: Distribution of FNVA per AWU by year............................................................ 14
Figure 1.10: Distribution of FNVA per AWU by type of farming in EU-15 in 2009............. 14
Figure 1.11: Distribution of FNVA per AWU of dairy farms in EU-15 by year .................... 15
Figure 1.12: Distribution of FNVA per AWU of field crop farms in EU-15 by year ............. 15
Figure 1.13: Distribution of FNVA per AWU of granivore farms in EU-15 by year ............. 16
Figure 1.14: Lorenz curve of the distribution of FNVA in EU-27 in 2009 ............................. 17
Figure 1.15: Income components per farm by EU groups in 2009 ......................................... 18
Figure 1.16: Income components per farm by type of farming in 2009 .................................. 19
Figure 1.17: Rate of Return on Assets by MS in 2008 and 2009 ............................................ 20
Figure 1.18: ROA in EU-27 by type of farming in 2009 ........................................................ 21
Figure 1.19: Development of the ROA by EU groups ............................................................ 21
Figure 2.1: Share of public support in total receipts by MS in 2009 ..................................... 22
Figure 2.2: Share of direct payments in total receipts by type of farming in 2009 ............... 23
Figure 2.3: Share of direct payments in FNVA by MS in 2009 ............................................ 24
Figure 2.4: Share of direct payments in FNVA by farm type in EU-27, 2009...................... 25
Figure 3.1: Long-term developments in the value of total assets (TA) and liabilities (TL) .. 26
Figure 3.2: Average total asset value per farm by MS in 2009 ............................................. 27
44
Figure 3.3: Average total asset value by type of farming in EU-27 in 2009 ......................... 27
Figure 3.4: Composition of liabilities per farm by MS in 2009 ............................................ 28
Figure 3.5: Composition of liabilities per farm in EU-27 by type of farming in 2009 ......... 29
Figure 3.6: Farm net worth per farm by EU group and MS in 2005 and 2009 ..................... 29
Figure 3.7: Farm net worth per farm in EU-27 by type of farming in 2009.......................... 30
Figure 3.8: Farm solvency in EU-27 by type of farming in 2009 ......................................... 31
Figure 3.9: Composition of assets by MS in 2009 ................................................................ 32
Figure 3.10: Composition of fixed assets by MS in 2009 ....................................................... 32
Figure 3.11: Composition of assets by type of farming in 2009 ............................................. 33
Figure 3.12: Composition of fixed assets by type of farming in 2009 .................................... 34
Figure 3.13: Labour input per farm (in AWU) by MS in 2009 ............................................... 35
Figure 3.14: Labour input per farm (in AWU) by type of farming in EU-27 in 2009 ............ 35
Figure 3.15: Share of working hours of paid and unpaid labour by MS in 2009 .................... 36
Figure 3.16: Share of working hours of paid and unpaid labour in EU-27 by type of farming
in 2009 ................................................................................................................ 36
Figure 3.17: Long-term developments in average nominal wages .......................................... 37
Figure 3.18: Average nominal wages of paid labour in 2009 ................................................. 38
Figure 3.19: Total farm UAA by Member State in 2009 ........................................................ 39
Figure 3.20: Total UAA of farms by TF in 2009 .................................................................... 40
Figure 3.21: Long-term developments in the share of rented land .......................................... 40
Figure 3.22: Average land rent by farm type in 2009 ............................................................. 43
Figure 3.23: Long-term developments in land rents................................................................ 43
TABLE INDEX
Table 1.1:
Development of the Gini coefficient of FNVA per AWU by EU groups........... 17
45
MAP INDEX
Map 1.1:
FNVA per AWU by FADN region in 2009 ............................................................ 8
Map 1.2:
Remuneration of family labour per FWU by FADN region in 2009 ...................... 9
Map 2.1:
Share of direct payments in FNVA by FADN region in 2009 .............................. 24
Map 3.1:
Average liabilities-to-assets ratio per farm by FADN region in 2009 .................. 31
Map 3.2:
Average nominal wage by FADN region in 2009 ................................................. 38
Map 3.3:
Share of rented land in the total UAA by FADN region in 2009 .......................... 41
Map 3.4:
Average land rent in the FADN regions in 2009................................................... 42
ANNEX INDEX
Annex 1:
Methodology ......................................................................................................... 47
Annex 2:
Income calculation ................................................................................................ 50
Annex 3:
Threshold by Member State in 2009 (ESU: European size units) ........................ 51
Annex 4:
FNVA and remuneration of family labour per AWU by Member State and
organisational form in 2009 .................................................................................. 52
Annex 5:
Number of holdings by type of farming in 2009 ................................................... 53
Annex 6:
Breakdown of revenue and costs of EU farms in 2009 ......................................... 54
Annex 7:
Balance sheet components in FADN..................................................................... 55
Annex 8:
Indicators by Member State in 2009 ..................................................................... 56
46
Annex 1: Methodology
Revenue items recorded in the FADN accounts
Output: includes crops and livestock production as well as other output if it is directly linked
to the farm activity, e.g. farm tourism, forestry, renewable energy, etc. It does not include
non-farm income of the household.
Pillar I and Pillar II-type payments: in the context of this analysis, Pillar I and Pillar II-type
payments refer not only to the part financed by the EU but also to subsidies financed by
Member States, including national aids. The FADN does not allow for a clear distinction
between EU and national payments over such a long time period.
Investment subsidies: investment subsidies could be regarded as part of the Pillar II
payments. However, they are shown separately because they are treated differently in the
calculation of the income estimators. As in the case of the Pillar I and Pillar II-type payments,
they include national payments.
Costs items recorded in the FADN accounts
Intermediate consumption: total specific costs and overheads arising from production in the
accounting year. Intermediate consumption includes for example costs for feed, fertilisers,
crop protection and energy.
Depreciation: depreciation of capital assets estimated at replacement value.
(Net) Farm taxes: farm taxes, except VAT, and other taxes on land and buildings. Subsidies
on taxes are deducted. Personal income taxes are not taken into account.
(Net) Taxes on investment: taxes not arising from current productive activity in the
accounting year, net of subsidies.
Wages: wages and social security charges. Amounts received by workers considered as
unpaid workers (wages lower than a normal wage) are excluded.
Rents: rent paid for farm land and buildings and rental charges.
Estimation of the imputed unpaid family factors costs
Family labour cost: this cost is estimated on the basis of wages which the owner of the farm
would have to pay if he were to hire employees to do the work carried out by the family
members.
It is estimated as the average regional wage per hour based on the FADN data12 multiplied by
the number of hours worked by family workers on the farm.
It is commonly acknowledged that the number of hours of family workers is typically
overestimated. Thus, a ceiling of 3 000 hours per Annual Work Unit is applied (this is the
12
If there are not enough farms (fewer than 20) with paid labour at regional level, the national average is taken
into account.
47
equivalent of 8.2 hours a day, 365 days a year, and corresponds more or less to the time that
can be spent on a farm by farmers milking cows).13
The use of hours makes it possible to give a manager more remuneration than an employee if
he is working more hours.
Reliable family labour costs estimates are difficult to obtain as records of hours worked on the
farm might be overestimated and it is not easy to determine what an appropriate remuneration
for family labour is. Farmers may agree to be remunerated at a below-average wage if they
consider farming as a way of life or have other sources of income for their household (e.g.
other gainful activities directly related to the holding, spouse working outside the farm).
Own capital cost
Own land cost: this cost is estimated on the basis of the rent that the owner of the farm
would have to pay if he were to rent the land he is using. It is estimated as the owned area
multiplied by the rent paid per hectare on the same farm or, if there is no rented land on the
farm, by the average rent paid per hectare in the same region and for the same type of
farming.14
Cost of own capital (except land): the cost of own capital (permanent crops, buildings,
machinery and equipment, forest land, livestock and crop stocks) is estimated at its
opportunity cost. That is how much money the farmer could earn if he were to invest the
equivalent of its capital value in safe financial assets.
The interest paid on the capital is not known, as this information is optional in the FADN
farm return. Nevertheless, in order to take into account the actual interest rate paid on the
farm, a weighted interest rate is calculated as the weighted average of this interest rate for
liabilities and the long-term (LT) interest rate obtained from Eurostat. It should be noted that
if the weighted interest rate is lower than the LT interest rate (which means that the
calculated rate of interest paid is lower than the LT interest rate), the LT interest rate is used
instead of the weighted interest rate.
13
A constraining factor of the estimation method is that if a farmer were to receive a salary he would probably
work less.
14
If there are not enough farms (fewer than 20) in a given region for a given type of farming, the national rent
per hectare for this type of farming is used (based on the TF8 classification).
48
Own capital value (excluding land and land improvement) is estimated as the average value of
the assets (closing plus opening valuation divided by two) multiplied by the real interest
rate.15 The correction is made by subtracting the inflation rate16 from the nominal interest rate.
The value of total circulating capital is not taken into account in the estimation process as data
are not sufficiently reliable in some Member States. The crop stocks value is however
included.
To calculate unpaid capital costs, the interest paid is deducted from the sum of the own land
cost and the cost of own capital except land to avoid double counting. The total capital cost
has to be at least equal to the interest paid:
Imputed unpaid capital costs = Max (interest paid; own land cost + estimated cost for own
capital except land - interests paid)
15
Any increase in the value of assets is excluded from income calculations. For example, land appreciates in
value over time, which is one of the reasons why investors invest in land. This gain is not included in the
income; therefore it would not be consistent to include it in the cost of capital. In addition, in the FADN
assets are valued at replacement value. Depreciation is based on this replacement value and therefore
already takes the increase in prices (inflation) into account. Consequently, it would be double counting to
include the inflation part of interest in the cost of capital.
16
The inflation rate is based on the Eurostat annual average rate of change in the Harmonised Indices of
Consumer Prices (HICPs), available from 1997. Inflation rates based on a GDP deflator and on a deflator of
gross fixed capital consumption have been tested, but were found to lead to very high negative costs for
capital, mainly in EU-10. An inflation rate calculated on the basis of price indices for gross fixed capital
consumption has been tested, as it seemed to be more closely related to assets. However, this rate has been
fluctuating widely over the years for certain MS. In addition, land is one of the most important assets which
does not depreciate. It follows that the inflation rate of gross fixed capital consumption may not have a
closer relationship with the change in the price of agricultural assets than with the consumer price indices.
49
Annex 2: Income calculation
50
Annex 3: Threshold by Member State in 2009 (ESU: European size units)
Member State
Threshold (ESU)
Belgium
Bulgaria
Cyprus
Czech Republic
Denmark
Germany
Greece
Spain
Estonia
France
Hungary
Ireland
Italy
Lithuania
Luxembourg
Latvia
Malta
Netherlands
Austria
Poland
Portugal
Finland
Sweden
Slovakia
Slovenia
Romania
United Kingdom
16
1
2
4
8
16
2
4
2
8
2
2
4
2
8
2
8
16
8
2
2
8
8
8
2
1
16(*)

(*) 8 ESU for Northern Ireland.
51
BE
BG
CY
CZ
DK
Other
DE
EL
ES
EE
FR
HU
IE
IT
52
LT
LU
LV
MT
NL
AT
PL
PT

Note. Where no information is displayed in a column, this is for confidentiality reasons (i.e. there were fewer than 15 holdings in the given category of the 2009 sample).
RO
FI
SE
SK
SI
UK
Other
Partnerships
Family farms
Family farms
Other
Family farms
Other
Partnerships
Family farms
Other
Partnerships
Family farms
Other
Partnerships
Family farms
Other
Family farms
Other
Partnerships
Family farms
Other
Family farms
Other
Partnerships
Family farms
Other
Partnerships
Family farms
Other
Family farms
Partnerships
Family farms
Other
Family farms
Other
Partnerships
Family farms
Family farms
Other
Family farms
Other
Partnerships
Family farms
Other
Partnerships
Family farms
Other
Partnerships
Family farms
Partnerships
Family farms
Other
Partnerships
Family farms
FNVA/AWU
Family farms
Other
Family farms
Other
Partnerships
Family farms
Other
Partnerships
Family farms
Partnerships
Family farms
Annex 4: FNVA and remuneration of family labour per AWU by Member State and organisational form in 2009
70 000
60 000
50 000
40 000
30 000
20 000
10 000
-10 000
-20 000
-30 000
-40 000
-50 000
-60 000
-70 000
Annex 5: Number of holdings by type of farming in 2009
Types of farming
Fieldcrops
Horticulture
Wine
Other permanent crops
Milk
Grazing livestock
Granivores
Mixed (crops and livestock)
Total Groups
Farms represented
Sum
1 498 522
164 613
231 260
853 193
502 822
610 290
138 903
948 806
4 948 409
53
Sample farms
Sum
23 928
4 811
3 912
7 383
12 489
10 474
4 511
12 868
80 376
Annex 6: Breakdown of revenue and costs of EU farms in 2009

700,000
600,000
500,000
400,000
300,000
200,000
100,000
CY
Total output
Public support
Total intermed. Consumption

Note. Receipts (Rec), Expenses (Exp).
54
Depreciation
Own factors
SE
Exp
Exp
SI
Rec
Exp
SK
Rec
Rec
Exp
Exp
FI
Rec
Exp
RO
Rec
Exp
PT
Rec
Exp
PL
Rec
Exp
AT
Rec
Exp
NL
Rec
Exp
MT
Rec
Exp
LV
Rec
Exp
LU
Rec
Exp
LT
Rec
Exp
IT
Rec
Exp
IE
Rec
Exp
HU
Rec
Exp
FR
Rec
Exp
EE
Rec
Exp
ES
Rec
Exp
EL
Rec
Exp
DE
Rec
Exp
DK
Rec
Exp
CZ
Rec
Rec
Exp
Exp
BG
Rec
Exp
BE
Rec
Rec
UK
Annex 7: Balance sheet components in FADN
55
Annex8: Indicators by Member State in 2009

Member
State
FNVA
FNVA per
AWU
Income
Return on Share DP
remaining
assets
in revenue
per FWU (*)
Share DP Average
Average
in FNVA asset value liabilities
/AWU
/FWU
%
%
%
BE
67,961
32,099
20,027
2.0%
9.2%
29.5%
BG
9,639
3,837
1,998
4.1%
17.6%
47.4%
CY
9,986
7,994
5,323
-0.1%
9.2%
28.9%
CZ
80,034
11,000
5,938
-0.1%
17.6%
72.5%
DK
67,275
42,122
-44,316
-0.5%
10.1%
47.5%
DE
63,079
27,585
8,944
0.6%
14.1%
49.6%
EL
12,798
10,991
7,876
2.0%
21.9%
42.2%
ES
25,923
17,785
13,151
1.4%
15.4%
30.7%
EE
20,542
8,360
3,787
1.5%
14.5%
64.6%
FR
39,607
20,963
6,660
-2.3%
15.8%
63.2%
HU
18,524
10,461
5,801
3.0%
16.7%
62.8%
IE
17,311
15,127
35
-0.4%
24.9%
82.5%
IT
31,178
23,673
20,011
1.7%
8.3%
15.7%
LT
12,269
6,634
6,099
7.5%
17.8%
55.8%
LU
38,742
22,980
-442
-0.3%
13.0%
62.3%
LV
12,427
5,800
1,918
0.1%
18.2%
73.2%
MT
19,507
10,323
7,396
-1.6%
7.5%
27.1%
NL
100,637
35,836
2,453
-0.3%
3.7%
15.1%
AT
29,806
19,101
5,825
0.6%
12.1%
36.1%
PL
8,427
4,817
3,188
-0.3%
14.8%
47.2%
PT
12,485
8,167
4,815
0.3%
15.2%
36.0%
RO
5,819
3,649
2,403
2.3%
13.0%
30.5%
FI
31,138
21,098
7,913
-3.0%
19.6%
83.8%
SE
29,422
19,890
1,518
-4.5%
15.7%
83.7%
SK
25,356
1,639
-1,589
-12.7%
20.0%
443.8%
SI
7,719
4,679
1,739
-2.4%
12.3%
48.8%
UK
74,965
32,675
22,975
1.3%
14.3%
48.8%
EU27
22,695
13,873
7,344
0.4%
13.5%
39.5%
EU15
32,171
21,022
10,943
0.4%
13.2%
38.0%
EU10
10,731
5,695
3,382
-0.1%
15.8%
56.4%
EU2
6,267
3,682
2,359
2.6%
13.9%
33.6%
(*) After deduction of all economic costs except the opportunity costs for family labour.
56
Net worth
578,372
162,565
415,807
48,665
8,983
39,683
171,879
3,825
168,054
792,548
182,724
609,823
2,409,127 1,253,462 1,155,664
782,319
150,412
631,906
81,593
594
80,999
314,948
7,043
307,906
217,021
65,344
151,677
354,713
137,115
217,598
144,861
34,734
110,127
854,523
23,694
830,829
325,514
4,690
320,824
108,273
16,025
92,248
1,008,880
169,415
839,465
104,459
33,838
70,621
318,575
18,226
300,349
1,945,816
739,686 1,206,130
446,851
46,018
400,834
132,507
8,360
124,147
85,817
2,440
83,377
38,849
788
38,061
380,925
108,741
272,184
615,158
190,418
424,740
829,309
161,815
667,494
195,528
3,127
192,401
1,320,803
129,870 1,190,933
288,287
44,038
244,249
417,701
67,949
349,752
148,360
14,663
133,697
40,001
1,749
38,252
Paid labour
input
%
18.3%
51.1%
25.2%
80.0%
46.2%
38.9%
11.0%
23.5%
50.7%
25.9%
58.6%
5.8%
24.6%
20.3%
15.1%
34.4%
16.3%
44.8%
6.8%
13.4%
15.6%
16.1%
17.0%
19.0%
91.8%
3.3%
40.3%
23.3%
24.2%
23.4%
21.0%
Unpaid
labour
input
%
81.7%
48.9%
74.8%
20.1%
53.9%
61.1%
89.0%
76.5%
49.3%
74.2%
41.4%
94.3%
75.4%
79.7%
84.9%
65.6%
83.7%
55.2%
93.2%
86.6%
84.4%
83.9%
83.0%
81.0%
8.2%
96.7%
59.7%
76.7%
75.8%
76.6%
79.0%
Wages /
hour
/hour
9.7
1.3
3.7
5.0
22.0
9.5
3.7
6.8
4.1
12.8
3.4
9.6
8.4
2.4
10.7
3.1
5.2
15.6
6.9
2.3
4.1
1.2
13.4
15.5
4.8
4.3
9.7
6.3
9.4
3.4
1.2
Average
UAA
ha
46.7
29.0
7.2
231.8
83.8
85.4
7.6
35.5
131.1
77.5
53.0
45.6
16.3
50.5
79.4
65.1
3.5
32.0
34.1
18.3
25.6
12.2
53.1
98.7
574.6
11.3
161.6
32.1
39.2
28.9
14.2
Share of
rented
land
%
74.0%
88.9%
65.5%
85.6%
27.4%
69.6%
50.7%
36.2%
59.7%
84.7%
64.2%
17.4%
39.9%
57.9%
49.9%
43.4%
80.9%
40.4%
30.9%
28.6%
28.3%
46.3%
35.3%
52.9%
96.1%
33.1%
43.1%
53.0%
53.5%
49.5%
56.6%
Level of
rents
/ha
247.2
73.6
187.3
52.8
590.9
214.2
242.4
106.4
13.3
155.7
75.8
236.9
166.3
27.7
185.8
15.3
69.9
735.2
213.3
44.2
83.9
54.2
197.5
141.2
35.8
73.2
117.9
142.8
174.7
48.5
61.6
European Commission
EU farm economics 2012
based on FADN data
Disclaimer:
This publication does not necessarily reflect the official opinion of the European Union. Neither the European Union institutions and bodies nor any
person acting on their behalf may be held responsible for the use which may be made of the information contained therein.
Contact:
European Commission
DG Agriculture & Rural Development,
Microeconomic analysis of EU agricultural holdings
E-mail: agri-rica-helpdesk@ec.europa.eu
Internet: http://ec.europa.eu/agriculture/rica/index.cfm
This report provides an overview of key

economic developments in the European
agricultural sector based on the latest data
available in the Farm Accountancy Data
Network (FADN) which are from 2009.
.
European Commission
Directorate-General for Agriculture and Rural Development
http://ec.europa.eu/agriculture

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EU farm

Brussels, May 2013

EU FARM ECONOMICS OVERVIEW

ECONOMIC SITUATION OF FARMS..................................................................... 5

Farm income ...................................................................................................... 5

IMPORTANCE OF DIRECT PAYMENTS FOR FARM INCOME ....................... 22

FARM STRUCTURE ............................................................................................... 26

ECONOMIC SITUATION OF FARMS

Figure1.1: Farm net value added by Member State in 2009

Source: DG AGRI EU-FADN.

An alternative measure of agricultural holdings income, namely the remuneration of family

Remuneration of family labour/FWU

EU27 Remuneration of family income/FWU

Source: DG AGRI EU-FADN.

EU27 Remuneration of family labour/FWU

Source: DG AGRI EU-FADN.

Source: DG AGRI EU-FADN.

Source: DG AGRI EU-FADN.

Results by type of farming

Figure 1.4: FNVA per farm in EU-27 by type of farming in 2009

Source: DG AGRI EU-FADN.

Figure 1.5: FNVA per AWU by type of farming in 2009

Remuneration of family labour/FWU

EU27 Remuneration of family income/FWU

EU27 Remuneration of family income/FWU

Source: DG AGRI EU-FADN.

Results by organisational farm and EU group

Source: DG AGRI EU-FADN.

Remuneration of family labour/FWU

Source: DG AGRI EU-FADN.

As depicted by box-plots2 in Figure 1.8, agricultural incomes vary considerably across

Source: DG AGRI EU-FADN.

Source: DG AGRI EU-FADN.

Source: DG AGRI EU-FADN.

Source: DG AGRI EU-FADN.

Source: DG AGRI EU-FADN.

Source: DG AGRI EU-FADN.

Figure 1.14: Lorenz curve of the distribution of FNVA in EU-27 in 2009

Cumulated share of total FNVA[%]

Development of the Gini coefficient of FNVA per AWU by EU groups

Source: DG AGRI EU-FADN.

Total intermed. Consumption

Source: DG AGRI EU-FADN.

Results by type of farming

Total intermed. consumpt.

Total external factors

Source: DG AGRI EU- FADN.

Return on assets (ROA) measures the

Results by Member State

2009 Average EU27

Source: DG AGRI EU-FADN.

Results by type of farming

Figure 1.18: ROA in EU-27 by type of farming in 2009

2009 Average EU-27

Source: DG AGRI EU-FADN.

Source: DG AGRI EU-FADN.

IMPORTANCE OF DIRECT PAYMENTS FOR FARM INCOME

Share of direct payments in total revenue

Results by Member State

%Public support on receipts

EU27% of public support

Source: DG AGRI EU-FADN

Results by type of farming

Fieldcrops Mixed (crops